Buffett says 'sprawl' is good, but may not be good enough

NEW YORK Feb 28 (Reuters) - Warren Buffett wants to buy
more businesses to add to Berkshire Hathaway Inc's
"sprawl," but cautioned it may not keep the company he has run
for 50 years from evolving into something rarely used to
describe it up until now: average.

In his annual letter to shareholders, Buffett on Saturday
said Berkshire's huge balance sheet gives him the power to
funnel capital to some of the more than 80 operating units that
deserve it, while its decentralized structure makes it the "home
of choice" for many businesses looking to sell.

"Berkshire is now a sprawling conglomerate, constantly
trying to sprawl further," Buffett wrote. "In an operating
sense, Berkshire is not a giant company, but rather a collection
of large companies."

That sprawl, including 9-1/2 businesses that would on their
own make the Fortune 500 - Berkshire owns half of ketchup maker
H.J. Heinz Co for instance - may limit its power to outperform.

Indeed, that power has been waning.

Berkshire's book value per share, Buffett's favored growth
measure, has after taxes risen less than the Standard & Poor's
500 index including dividends, pre-tax, in five of the
last six calendar years, after dwarfing the index in the prior
44 years.

Its stock price has also slightly lagged the index since the
end of 2008, the company said.

"The bad news is that Berkshire's long-term gains - measured
by percentages, not by dollars - cannot be dramatic and will not
come close to those achieved in the past 50 years," Buffett
wrote. "The numbers have become too big. I think Berkshire will
outperform the average American company, but our advantage, if
any, won't be great."
Continued...